71 total views, 2 views today
The National Democratic Congress (NDC) Members in Parliament led by Haruna Iddrisu have written to the Minister of Finance, Ken Ofori-Atta for detailed explanation to Ghanaians on issues surrounding the sale of the Capital Bank and UT Bank to the GCB Bank.
The statement jointly signed by Iddrisu and the Ranking Member on Finance Committee of Parliament, Cassiel Ato Forson, copied to the Auditor General, Ghana Office of the International Monetary Fund (IMF), World Bank Ghana office, Majority Leader and Minister of Parliamentary Affairs, call on the Media, the Minister and the Governor to respond immediately and explain the entire circumstances of the liquidation.
According to Minority, “the IMF staff report for the 2017 article (iv) consultation, fourth review under the extended credit facility arrangement, request for waiver for nonobservance of performance criteria, and request for extension and rephrasing of the arrangement, supplementary information (pages 2 & 3), Preliminary estimates suggest that the assuming bank (GCB Bank, the second largest bank in Ghana) will receive government bonds of around GHS 1.6 billion (0.8 percent of GDP) to balance assets and liabilities (final numbers will only be available after due diligence on the transferred assets).
This means that the taxpayer is to bear the cost of the liquidation through the issuance of a GHS 1.6 billion Bonds.”
Below is the full statement:
REQUEST FOR INFORMATION On THREE TECHNICAL ISSUES THAT REMAIN 0UTTANDING
The Minority Leadership brings you compliments of the season and best wishes for the New Year.
As part of our collective quests to build a strong, viable and resilient economy for the good of our countrymen and women, we write to request for information of the three (3) technical issues that remain outstanding, despite our requests in the past for clarihcation.
We will appreciate your early responses to the issues for better management of the economy. ‘
A) Liquidation of Capital and UT Banks
When the announcement was made about the BOG Directive to liquidate the Capital and UT Banks, we issued a Statement urging calm. At the same time, we noted that we did not have enough information to draw a firm conclusion. Subsequently, according to the IMF staff report for the 2017 article (iv) consultation, fourth review under the extended credit facility arrangement, request for waiver for nonobservance of performance criteria, and request for extension and rephrasing of the arrangement, supplementary information (pages 2 & 3), Preliminary estimates suggest that the assuming bank (Ghana Commercial Bank, GCB, the second largest bank in Ghana) will receive government bonds of around GHS 1.6 billion (0.8 percent of GDP) to balance assets and liabilities (final numbers will only be available after due diligence on the transferred assets).
This means that the taxpayer is to bear the cost of the liquidation through the issuance of a GHS 1.6 billion Bonds. We had occasion to raise the issue at the Finance Committee with the Governor of Bank of Ghana and were assured that the 2018 Budget would be used to clarify the situation to the public. Needless to say that this did not happen, despite the potential for substantive increase in the Public Debt and tax burden.
We urge you, Hon. Minister and Governor, to respond immediately and explain the entire circumstances of the liquidation to Ghanaians, who will be forced to bear the brunt of the liquidation. This is contrary the perception that the GCB Bank will absorb the loss as well as the policy prescription in the advanced countries where the burden of these costs are now to be put on shareholders and investors.
B) Cut-off rules: end2016 Debt Service Amount
At the time of presenting the 2017 Budget, the Hon. Minister disclosed that the Administration had reversed entries made in January 2017, being accrued debt service commitments for end-December 2016. We immediately objected to the move, as it was against the cash accounting rules that applied to weekends and public holidays.
Indeed, we expressed surprise that the Governor would go against its own strict rules and reopen the books for this adjustment to be effected. We stressed that the change would result in a shift to Accrual Accounting and, therefore, a significant change in PFM policy.
Finally, we noted that, if indeed the change was government policy, then we will monitor its strict application to FY2017. This is because 2017 also ended on a weekend. Indeed, we expect that the rule change would have applied to payment dates that fell on a weekend as well as Public Holidays.
We note that it is over two months since the 2018 Budget was read. We also observe that the Minister did not pronounce on the implications of the rule change and he has not done so to date. The Governor has also not pronounced on the matter in presenting MPC reports to Ghanaians.
Therefore, we wish to make a formal request on the matter to the Hon. Minister and the Governor, to appraise the Minority of the full implications of the rule change.
2) Adjustment of end-2016 Arrears by th7 billion
We also objected to the adjustment of end-2016 arrears by th7 billion. The result of the debt service and arrears adjustment is a significant increase in the deficit to 10.9 percent as reported in paragraph 14 under fiscal performance of the Ministry
of Finance document (Mid-Year Fiscal Policy Review of the 2017 Budget Statement and Economic Policy). Recall that the basis of our objection is that this will also result in a major change in the basis for calculating commitments in the Budget.
Recently, the Vice President noted at the New Year School that the amount was actually th 3.1 billion–an amount that is also lower than the th5 billion that the Hon. Minister cited in the 2017 Mid-Year Review Statement. Surprisingly, at the same New Year School, the Vice President stated that the deficit for 2016 was still 10.9 percent on commitment basis.
As we noted, in response to the Vice President, the lower ligure of th3.1 billion should result in a lower deficit for end-2016. In fact, the deficit is also expected’to be lower from savings arising from the audit of these contracts as the Mahama Administration did after the audit of BDC forex loss and subsidy claims; payroll audit; and, potentially the audit of Forex provisions in domestic contracts (the drafts, of which were handed over to the Hon. Minister).
We stand by our position that the outcome of these audits (i.e. the earlier NDC final drafts or the recent ones by the NPP) must be made public.
D) Conclusion In summary, we write to seek three (3) clarifications: (a) consistent application of the rule on calculating commitments at the end of 2017; (b) firm assurance that
the end 2016 budget deficit has been adjusted; and (c) the true burden of the cost of liquidation of Capital and UT Banks.
We thank you in advance for your joint cooperation.
Source: Francis Edzorna Mensah
- I am committed to press for progress – Rebecca Akufo-Addo
- Inter University Halls Debate launched in Accra